Razorback Companys 2011 master budget included the following fixed budget report. It is based on an expected

Razorback Company’s 2011 master budget included the following fixed budget report. It is based on an expected production and sales volume of 10,000 units.

Required
1. Classify all items listed in the fixed budget as variable or fixed. Also determine their amounts per unit or their amounts for the year, as appropriate.
2. Prepare flexible budgets for the company at sales volumes of 8,000 and 12,000 units.
3. The company’s business conditions are improving. One possible result is a sales volume of approximately 14,400 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2011 budgeted amount of $20,720 if this level is reached without increasing capacity?
4. An unfavorable change in business is remotely possible; in this case, production and sales volume for 2011 could fall to 5,000 units. How much income (or loss) from operations would occur if sales volume falls to thislevel?

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RAZORBACK COMPANY Fixed Budget Report For Year Ended December 31,2011 $250,000 Direct materials . $100,000 Machinery repairs (variable cost).. Depreciation-machinery . 11.920 Utilities (80% is variable cost) . . . . 6,000 148,920 101,080 Shipping... Sales salary (ixed annual amount) 18,000 57,000 General and administrative expenses Salaries.... t expense 10,00023,360 20,720 operations